Dollar Tree raises the cost of its priciest items to $7 to cash in on influx of wealthier customers willing to spend more

Dollar Tree has said it will raise the highest price it charges for items to $7 due to an increase in the number of wealthy shoppers visiting its stores.

While the majority of items sold by the discount retailer cost $1.25 after a price rise in 2021, certain items started costing as much as $5 beginning last June.

In the coming months, other items - including food, snacks, beverages, pet care and personal care - could cost up to $7.

And the company aims to eventually sell products for $10, its CEO told investors during an earnings call this month, which would mark a significant departure from the dollar store concept.

Dollar Tree this week said it would raise the price limit on the items it sells to $7

Dollar Tree CEO Rick Dreiling (pictured) said the company aims to sell items for as much as $10 in the coming years

'This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7,' CEO Rick Dreiling said.

'Our shoppers will find $5 bags of dog food next to our traditional $1.25 pet treats and toys, and our $3 bags of candy will be found in the candy aisle,' he said.

Justifying the decision, he said the fastest-growing demographic of Dollar Tree shoppers in 2023 were those earning more than $125,000 per year.

According to Dreiling, such wealthy shoppers bring with them 'firepower'. 

'I think that attraction is the multi-price point and the fact that we've been able to increase the variety of products in the store,' he said.

For 35 years, products in Dollar Tree cost no more than just one dollar, but in November 2021 the retailer rose that by a quarter up to $1.25.

While the move was controversial, it paid off - not only did it boost sales but it also enabled it to stock a wider range of products.

'Our transition to the $1.25 price point has enabled our merchants to greatly enhance value,' previous CEO Michael Witynski told investors a year later.

The majority of products in Dollar Tree stores cost $1.25 but last year it raised the cap to $5

Then, last June, it raised its cap significantly to $5 for some frozen and chilled foods, executives said at the company's investor day.

According to a slide it published last June, it was planning to fill its freezer and fridge sections with higher-priced items - costing $3, $4 and $5.

Dreiling told investors the $10 price cap is still in the retailer's sights.

'We continue to believe in the $10 target that we announced... and we're continuing to march toward that goal,' he said.